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Westland Milk Products yesterday posted a before-tax profit of $3.25million as it tries to claw its way to profitability.

Last year's before-tax profit was just $29,000.

On releasing its annual report the West Coast farmer-owned co-operative acknowledged it was still not industry competitive and lacked "financial flexibility" due to high debt levels and the need for more working capital.

The $3.25million before-tax profit is partly down to book adjustments, including keeping back 5c for every kilo of the milk payout to farmers for 2017-18.

The $6.07 payout for the past year was up 89c on the previous year, but the company still had to improve the bottom line, chief financial officer Dorian Devers said.

"Although we went some way to closing the gap between Westland's payout and other dairy processors, there is still a gap, meaning our payout is still not competitive,"he said.

Total revenue was $692,586,000 for the past year. Of this, $386,032,000 was paid to farmers for their milk.

In a statement this morning, board chairman Peter Morrison said the primary focus was to deliver a competitive payout next year and "get the basics right" to improve returns and value to shareholders.

The company also needed to take up the full range of opportunities with its need for more capital, he said.

Shareholders will be given a first progress report on the capital restructure review now under way at the annual general meeting at Shantytown on December 5. The West Coast co-operative could be sold off altogether or ownership watered-down with a new "cornerstone" investor to bring new capital on board.

The company needed to "consider all the options" to attain a higher payout and improve financial flexibility.

The company had increased its value-add income by $15million, "evidence that segregated, value-add product can produce success", chief executive Toni Brendish said.

It had success in sales of goods that were less vulnerable to global price fluctuations. This included a 50.4% increase in sales of Westgold butter, UHT sales of 6.045million litres compared to 1.024million litres the year prior, and nutritional milk product sales up 4543 metric tonnes.